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Governor Newsom announces $1.1 billion small business aid coming to California

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The US Treasury Department’s State Small Business Credit Initiative increases access to capital for small business owners, covering more than 80% of loans.

California launches new program designed to create a more inclusive venture capital ecosystem

SACRAMENTO — Today, Governor Gavin Newsom announced $1.1 billion in funding to support small businesses in California. The funding comes from the U.S. Department of the Treasury’s State Small Business Credit Initiative (SSBCI) and is intended to unlock an additional $18 billion in capital for small businesses in California.

“California is home to the largest and most diverse small business community in the nation,” Governor Newsom said. “We are a state driven by small business innovation and entrepreneurship. We have invested billions of dollars in helping more Californians realize their California Dreams.Thanks to this funding, undervalued and underserved business owners can: We will have more access to the vital funds we need to succeed and thrive.”

As part of the Federal American Rescue Plan Act of 2021, California will receive $1.1 billion to help small businesses. The California Infrastructure and Economic Development Bank (IBank) and the California Pollution Control Financing Authority split the quota evenly to fund the small business credit assistance program. IBank will also launch a new program designed to create a fairer venture capital ecosystem.

This is the second time a state can apply for this federal program. The first time was in 2010, when the State of California gave him one grant to operate three state credit assistance programs: the Small Business Loan Guarantee Program, the Collateral Assistance Program, and the California Capital Access Program for Small Businesses (CalCAP). We applied for and received $68 million.

Small Business Loan Guarantee Program

As in 2010, IBank will use the majority of SSBCI funds for the Small Business Loan Guarantee Program, working with nonprofits and lenders to provide small business loan guarantees. The guarantee can repay lenders up to 80% of outstanding small business loans if the small business is unable to make payments. By insuring loans, IBank gives lenders the confidence they need to issue loans to small businesses that otherwise struggle to access capital.

Encourage lenders to sign up

To deploy funds quickly and serve small businesses, IBank is asking lenders, including community development financial institutions and minority depository institutions, to sign up to use the Loan Guarantee Program. Only one page form is required for certification. A list of already participating lenders is available on the IBank Participating Lenders website.

venture capital program

In addition to small business loan guarantees, IBank will use approximately $200 million of its SSBCI funds to launch new venture capital programs. , and areas with socio-economically disadvantaged or very limited funding from venture capital. The program also promotes climate equity and climate justice.

Scott Wu, Executive Director of IBank, said: “Despite California’s dominance in the VC industry, venture capital remains inaccessible to many entrepreneurs. is critical to the state’s drive for equity.”

First round success of SSBCI (2010)

In the first round of SSBCI, California spent $168 million to support more than 10,000 loans, generate more than $1 billion in total funding, and create or sustain more than 90,000 jobs for Californians. did.

CPCFA Executive Director Shela Tobias-Daniel said: The CPCFA and IBank programs complement each other and serve different facets of California’s small business community. Working with IBank and the California Office of Small Business Advocacy (CalOSBA) to reach more small businesses through small business-focused lenders and other organizations such as chambers of commerce, regional small business development centers, and affiliated organizations I look forward to reaching out to We serve small business owners. ”